Keating Five |

Site Search Navigation

Search NYTimes.com

Site Navigation

Site Mobile Navigation

Advertisement

Supported by

Keating Five

News about Keating Five, including commentary and archival articles published in The New York Times. More

In April 1987, as the world of savings and loan associations teetered under the weight of a boom in commercial real-estate lending, a group of senators met twice with federal banking regulators on behalf of Charles H. Keating, Jr., whose bank later collapsed at a cost to taxpayers of $3 billion. The senators -- Alan Cranston of California, John Glenn of Ohio, Dennis DeConcini and John McCain of Arizona, and Donald W. Riegle of Michigan (who attended only one of the meetings) -- had collectively received $1.3 million in campaign contributions from Mr. Keating, and their actions later became the subject of a lengthy ethics investigation into what became known as the case of the Keating Five. In 1991, the Senate censured Mr. Cranston and reprimanded the others for "poor judgment.''

With 26 days of televised hearings, the Ethics Committee investigation became an embarrassment for the entire Senate, shining a light onto the ways in which campaign donors sought and often received favors.

The committee found that in Mr. Cranston's case there was "substantial credible evidence" of impermissible conduct "in which fund raising and official activities were substantially linked." The panel cited four instances when contacts on behalf of Mr. Keating were made "in close connection with the solicitation or receipt of contributions."

The highlight of the hearings was the testimony of Edwin J. Gray, the former chairman of the Federal Home Loan Bank Board, which supervised savings and loans. He described how he was told to come alone to an hourlong meeting in Mr. DeConcini's office and sat flanked by Mr. Glenn, Mr. Cranston and Mr. McCain.

From the first words, Mr. Gray testified, he knew it was no ordinary meeting. "Senator DeConcini said, 'Mr. Chairman, we're here to talk about our friend from Lincoln Savings,' " Mr. Gray testified, referring to Mr. Keating and his California savings and loan association, Lincoln Savings and Loan, which was later seized by Federal regulators. Mr. Gray said the lawmakers came to the aid of Mr. Keating, who sought their help in pressing regulators to ease up on Lincoln as it was heading for insolvency, an account that was challenged by several of the senators.

The following week, the four senators and Mr. Riegle met with regulators supervising Lincoln, who disclosed to the Senators that they were making a criminal referral to the Justice Department about the savings and loan.

Mr. Keating, who maintained that the failure of his thrift was caused by regulators spent five years in prison after being convicted of federal conspiracy charges. After the verdict was thrown out, he pleaded guilty to four counts of fraud.